Netflix ads president Amy Reinhard on building a proprietary ad stack, vertical video, and advertiser strategy

Speaker 2: Let's bring her in to the TV's NL Show. Amy, how are you doing?

Speaker 10: Doing well. How are you doing?

Speaker 2: Doing fantastically. It is

Speaker 1: honor to have you here. Yes. Our first ever guest from Netflix.

Speaker 2: I think so. Thank you so much for taking the time.

Speaker 1: We took like 2,000 interviews to get get you guys on here. We're we're excited to be Honored

Speaker 10: to be the first.

Speaker 2: Yes. Yes. I mean, obviously, fans of both Netflix and advertising. But would love to start with a little bit of background on yourself, your experience, and just sort of your intro to how you found yourself as the president of ads at Netflix today?

Speaker 10: Sure. I've been at Netflix for about nine and a half years now in a couple of different roles. Started out first in our content organization doing both licensing and then overseeing production. And about two and a half years ago, I stepped into this role overseeing our ads here. And it's been a fantastic two and a half years, a lot of excitement. Feels like we've been able to accomplish a lot and great company. So

Speaker 2: If you take us back to the initial the initial push into ads, What can you tell us about the trade offs, the build versus buy debates that were going on at the time, the just maybe even the cultural changes? I think we are super we love ads. We think it's fantastic business model. It's a way to deliver great value to customers at lower prices and there's so many benefits. But culturally

Speaker 1: Yeah. What was the debate like?

Speaker 2: Yeah. What was it like internally?

Speaker 10: Yeah. Well, I think it's been well publicized, you know, that not being in advertising was a strategic bet for a long time. Yeah. Right? And so, early in 2021, 2022, when we started to talk about the notion of getting into this business, yeah, it created a lot of, I think, to say, you know, angst within the company for a a bit of time because it was such a big shift, to your point, culturally and strategically. So I would say and then we made the announcement that we were getting into it. And in terms of the whole build versus buy, you know, we partnered with Microsoft to enter the business very quickly, and that got us up and running. But it's been, you know, we made the decision about eighteen months ago to lean into building our own tech stack. And we launched that a year ago. So we're just a year. I keep having to remind myself how nascent our tech stack is because we've been able to deliver so many developments and so much progress against that over the course of the last year. But I would say, full circle, you know, we were passed. We put to bed all notions that we should be in this business. I think everybody understands strategically now that it is important for us to be that. And we've been able to grow our user base because we have been able to get to a lot more consumers who are looking for that low cost option and and are fine with ads. Right? So it's been a great thing for the company, I think, and everybody's on board. And, you know, the recent news, as you heard, we did which we just announced our upfront yesterday that we're expanding that ad tier

Speaker 11: Yeah.

Speaker 10: Into 15 more countries around the world and. There you go.

Speaker 2: Fantastic.

Speaker 10: Well, everybody's on board full speed ahead.

Speaker 1: How are you pitching the ad product today? Is this primarily brand marketing? Is there a timeline to get to more of a, like, performance focus? Like, what is your pitch to advertisers?

Speaker 10: Yeah. You know, as we see in the marketplace, advertisers are oriented around outcomes. Right? So, we know that we need to be a full funnel solution and we believe that we have the metrics to support that. So, to your point, we've been very successful with some of the brand partnerships that we've done over the course of the last year and a half. But, we've also seen really good conversions in terms of lower funnel and making sure that we're driving purchase intent and consideration. So as we build out more of our solutions, we are going after that full funnel solution.

Speaker 2: What are conversations like around how brands should how much brands should want to associate with particular pieces of content. Because I think some brands might come in and say, well, I'm advertising strollers and I know that parents will be watching K pop Demon Hunters with their kids. And so like this is the most on the nose directed and I care. I want my brand linked to this particular piece of content. But we've seen time and time again that like once the algorithms get good enough, once dynamic ad placement can actually flourish, you every company tends to see better performance there. So where are the ad buyers today in terms of those tradeoffs?

Speaker 10: You know, there's a full spectrum. So, absolutely, we get advertisers who want to be associated with k pop demon hunters like McDonald's or with Stranger Things. Right? Like, those big, pet fall moments. Those are oftentimes the easiest to sell. I think in k pop demon hunters is actually an interesting case because when it came out a year ago, we didn't know that we had a hit on our hands until about sixty days into it. Yeah. And I think that's what the magic Netflix is that we have so much variety and depth of content that we're programming and trying to hit all audiences that you never know where your next hit is going to come from. Mhmm. And so, those audiences, selling that, you know, audience behavior moods, targeting moods and relevance is really important to a lot of different advertisers. So, again, we just want to meet advertisers where they're at. And, some folks understand that being across a number of different programming choices is important. And, some people want to tag along with those big tent poles and we want to, you know, provide those opportunities.

Speaker 2: Yeah. I mean, it's interesting. Netflix has like deep, deep experience in machine learning, AI, recommendations, all parts of, like, you know, high throughput data processing. But I'm I'm interested in any learnings or surprises from building the proprietary ad delivery stack. Has it been as expected? Has it been there's new skills that you need to bring? Because a lot of companies have been successful at scaling content and then struggle to figure out ad delivery. You obviously haven't. But then also there's this AI boom going on which can help with productivity but also new algorithms and new ways to actually target content. And so, I'm interested in what where the build out didn't match your expectations or surprised you.

Speaker 10: You know, as a tech company, we do a lot of testing and we go into things with hypotheses. So we're constantly testing things around our member experience. And, you know, I think that's been a differentiator for us, like, really leaning into reducing member friction, making sure that member experience is a good one with lower ad loads, lower frequency apps, those types of things. But we we do know that there are times when we have to pivot. So I would you there's not just one example of a time that we've had a wrong hypothesis. We're constantly testing things out and figuring out where we, you know, where that those hypotheses prove out, where we need to pivot, and and, you know, change swiftly. So it's hard to point to one specific moment where we it felt like it's been a learning. I would say the bigger learning for us just as a company is, you know, this is a relationship business too. And, we've never this you know, you talked about kind of getting into ad sales. Right? We've never had a sales

Speaker 4: team Yeah.

Speaker 10: In terms of our overall organization. So, would say there's more organizational learnings

Speaker 2: Yeah.

Speaker 10: Than necessarily tech learnings because we're so used to that tech cycle of testing and learning and iterating.

Speaker 2: How are you thinking about the the ad product feeding back into the content production? I've noticed that Netflix has been fantastic in my opinion of creating more engaging content. I was watching The Rip with Matt Damon. And you click the play button and you see Matt Damon's face in within like two seconds. And it clearly confirms that you're watching the right movie and then the title card comes in. And that's a departure from fifty years ago. You watch The Shining and, you know, it's a helicopter shot of a car for five minutes and they show you the full titles. And it is a different style of editing and some people lament the old style. I particularly like the new style. And I'm wondering about we went through a period of time when television, there was the famous like fade to black and then the ad break and then fade back in and you resume. And Netflix has never had to contend with that in media products. But is that going to come back? Is there a next generation pattern for creating content that can both have ads in it and not? Are you seeing glimmers of what the future like the impact of ads might have on on, like, the editing structure and the timing and the pacing?

Speaker 10: Yeah. A lot of it, to be honest, depends on our creators. Yeah. So, you know, working with talent who and some of those and some of that talent may be more tech forward and are thinking through those types of things when they're writing shows. I'll give an example. Shonda Rhimes was used to writing for broadcast and network for many, many years. Yeah. So, when she writes a lot of her content, she's already thinking about where those natural breaks are.

Speaker 5: Mhmm.

Speaker 10: But not all writers do that, and that's okay. We can still find what are those natural breaks because we wanna make sure, again, getting back to the member experience, that it's not intrusive or it doesn't come mid sentence, right, and is cutting off any of the action. Yeah. We're able to adapt to to any way that our creators wanna to write the content and fit it into that member experience.

Speaker 2: Yeah.

Speaker 1: For US markets, is this is there any enterprise spending? I would imagine that a lot of enterprise buyers, like, have been Netflix subscribers for a really long time and maybe they're they're not getting served any ads at all and so this is more of a consumer opportunity? Or am I thinking about that the wrong way?

Speaker 10: We've most of our clients right now, the the target segment that we're going after are enterprise top 400 clients, Right? Because we think those are the ones who Oh, sorry.

Speaker 1: I meant I meant b to b versus, like, b to c company.

Speaker 10: Oh, we think about this more as a b to c opportunity Yeah. For the most part. And I think as we expand our learning and expand our offering, may get into the b to b space, but for the most part, to c.

Speaker 2: Yeah. Yeah. I I feel like all of that like, the the higher upmarket, more targeted, that's all unlocked with scale once more there's more learnings on responses. I'm wondering what other signals you think might be valuable because many times, you know, advertisers advertisements shown during a TV program are very passive, harder to track. But if someone's watching on their phone, there can actually be a call to action, a trackable link. Like, how I imagine that the data is messy, but how important is it to sort of close that loop in an ATT era where it's a little bit trickier but there's a lot of things that you can do on the signal side anyway?

Speaker 10: Yeah. You're absolutely right. And this is an area where I talked about the testing and iterating. Yeah. We're leaning in a lot on the testing. Yeah. What does that screen experience look like? You know, again, how do you meet the customers where they're at without being sort of intrusive? Yeah. A lot of testing going on in this space. But the biggest thing for us is, you know, privacy safe. We want to make sure that we're leaning into, again, that member experience and and taking care of our member's data.

Speaker 2: Yeah.

Speaker 10: But a lot more, I think, to come.

Speaker 2: Have you been surprised by the return of the QR code in maybe podcast advertising? But I see it a lot because people are watching on, you know, you they'll watch a YouTube video on a TV Yeah. And the creator will, you know, hard code in a QR code to link out. And that was something I I had completely written off QR codes and then they made a Yeah. Major comeback.

Speaker 10: No. I agree with you. From a member experience may not be the most simplistic thing. Understanding kind of the ad tech on the back end, I'm not surprised by it. It could be pretty complex pretty quickly.

Speaker 2: Yeah. And there's some we hit some sort of like inflection point where the maybe it was in a certain iOS revision where the camera app became so easy to press a button and pull out, then it detects the QR code so quickly that that flow because you used to need to, like, have a QR app separately to scan it, and now it's all integrated and so someone can just whip out their phone and and run right to it. Jordy, you have something else?

Speaker 1: Nothing super top of mind right now. I am I mean, last question I had is do you ever expect Netflix to serve more short form vertical video style ads in something like the Clips tab? I know the Clips tab right now is focused on basically content discovery, But I imagine in the future, people will spend more time in a format like that, especially on mobile.

Speaker 10: Absolutely. And that is one of the announcements we had at our upfront yesterday is that as we roll out this vertical video content, that we are going to be offering that to advertisers along with our todoom.com coverage in 2027. So, yes, we think that is a a big opportunity too.

Speaker 2: Last question for me. I would love to know about the intersection between games and ads. That's been a huge huge growth driver in other with other categories and other companies. But I'm wondering where that is in the road map, how you're thinking about that.

Speaker 10: We haven't thought about that yet. Look, our roadmap I could fill our roadmap for the next two to three years based on just some of the foundational things we wanna do and and a lot of the innovative areas we wanna lean into. Yeah. But it's an area that we're keeping an eye on. And as we watch that game's engagement increase, I wouldn't never say never. I've learned to never say never at Netflix, but it's not something that's on the near term roadmap.

Speaker 2: Okay. Thank you. Well, thank you so much for joining. This was a really great

Speaker 1: Great to meet you, Amy. Thanks for breaking down progress.